Ginnie Targets 'Buydown' Loans

Ginnie Mae issuers are being asked to review 2,360 loans and remove them from Ginnie-guaranteed pools if they have "buydown" features that reduce the homebuyer's monthly payments during the early years of the mortgage.Issuers of Ginnie Mae mortgage-backed securities are not permitted to include buydown loans in pools guaranteed by the government agency. "If the loans are buydowns, Ginnie Mae will require issuers to substitute eligible mortgages or buy them out of the pools," the agency said. As part of a quality control review, Ginnie Mae discovered that 2,360 loans in 1,693 Ginnie-guaranteed securities include loans that may have buydown features. "This review is driven by our desire to make sure the information we disclose about the loans backing our securities is 100% accurate, now and in the future," said Ginnie director Steven Ledbetter, who is in charge of securities policy and research. Ginnie Mae can be found online at www.ginniemae.gov.